RBA Leaves Door Open for Further Cuts

Australia’s central bank has left the door wide open for another cut in interest rates but felt a pause this month was prudent partly due to uncertainty about the behavior of households in a world of very low interest rates.

In minutes of the March 3 meeting, when the Reserve Bank of Australia (RBA) surprised some by not delivering a back-to-back easing, the central bank said members saw benefit in allowing some time for the structure of rates and the economy to adjust to the earlier change.

“They also saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path,” the minutes said.  “Taking account of all these factors, members judged it appropriate to hold the cash rate steady for the time being, while recognizing that further easing over the period ahead may be appropriate to foster sustainable growth in demand while maintaining inflation consistent with the target.”

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